5 Worst U.S. Cities for Renters

BOSTON ( MainStreet) -- The U.S. housing bust has hit consumers, banks and financial markets hard -- but it's also hurt tenants in cities where homeowners who lost properties to foreclosure moved into apartments, driving up local rents.

Zillow ( Z), which is well known for estimating the current value of virtually every home in America, ranked rental markets in the 100 most-populous U.S. cities based on four criteria:

Median asking prices per square foot for all rentals advertised on Zillow.com

Estimated rental value of a typical residence within a given city (including owner-occupied properties not available for rent)

How much each community's median rental value has increased or decreased over the past 12 months

Each market's "break-even period," an estimate of how many years of homeownership it takes before buying a place costs less than renting

Gudell says the worst cities for tenants have not just high rents, but rapidly rising ones. They also have relatively low home prices that translate into short break-even periods, meaning many renters do better buying places instead of renting.

But bad cities for renters are often good cities for real-estate investors, Gudell says. After all, rapid increases in rental values point to good tenant demand, while short break-even periods mean investors can expect solid capital gains on their purchases.

"Looking at the bottom of the list is a good jumping-off point for investors," Gudell says, although she adds that Zillow's rankings only project each rental market's future conditions out a year or so.

Look below for a rundown of the five cities at the bottom of the Rental Bang for Your Buck rankings (or click here to check out the communities at the top of the list.)

Zillow ranked cities on a weighted index of zero to 100, with a 100 score equaling first place in all data points measured.

All figures are as of Aug. 31 and refer just to housing within city limits, not to properties in surrounding suburbs. Dollar figures refer to the Zillow Rental Index, an estimate of how much a typical residence (even those not for rent) would fetch on the open market, while annual percentage gains refer to the 12 months ended Aug. 31.

The typical property in this community some 30 miles southeast of downtown Los Angeles carries a $2,179-a-month rental value, the 11th-highest among America's largest cities.

Santa Ana's rental values are also growing at 4.21% a year, or more than twice the U.S. norm. Similarly, the median Santa Ana rental lists for $1.68 a square foot, well above the $1.02 typical nationwide. "Santa Ana is an expensive market for renters," Gudell says.

The 329,000-population community also has a 2.76-year break-even period for buying vs. renting. That's below the U.S. median -- bad news for tenants.

That's because the typical Minneapolis residence has an above-average $1,451-a-month rental value. Rental values are rising at 4.92% a year, or more than twice the U.S. median.

Minneapolis rentals also list for a median $1.59 a square foot, or more than 50% above what's typical nationwide.

Add in the fact that the city has a below-average 2.45-year break-even point for buying vs. renting and you'll find that leasing a place there is about as much fun as swimming in Lake Minnetonka in January.

"Minneapolis is one of those markets where it's so much more expensive to rent than to buy that if you're going to stay there for a while, you should buy," Gudell says.

Gudell says this Miami-area community is a bad place for tenants because South Florida's foreclosure crisis has driven hordes of locals out of their houses and into rentals, pushing up rents even as home prices fell.

"A lot of families were displaced and ended up having to rent," she says.

As a result, Hialeah properties have an above-average $1,555 median rental value today -- and that's growing at a hefty 5.14% pace per year. The typical Hialeah rental also lists for $1.35 per square foot, or about one-third above what's typical nationwide.

At the same time, local home prices are so low that you'll break even by buying instead of renting in 225,000-population Hialeah after just 1.72 years. That's the seventh-shortest period for any major American city.

Worst market for renters: Miami Bang for Your Buck score: 14.84

The Magic City is anything but magical for renters.

Gudell says that's because Miami, like nearby Hialeah, has high rents and low home prices as a result of America's foreclosure crisis. "The South Florida region was hit incredible hard and had tons of foreclosures that they're still dealing with," she says.

As such, the median Miami residence has an above-average $1,811-a-month rental value -- and that's rising 5.91% a year, or nearly three times the U.S. median rate. The typical Miami rental also lists for $2.24 a square foot, the eighth-highest price for any big American city.

Lastly, Miami has a below-average 2.09-year break-even point for renting vs. buying, a bad sign for tenants. "For a lot of people, it would pay off to buy a place in Miami rather than rent," Gudell says.